Iceland's election turned into a cliff-hanger today

REYKJAVIK, May 13: Iceland's election turned into a cliff-hanger today with the result hinging on only 20,000 votes and the pro-business government clinging to its majority by just one seat.

The margins were razor-thin throughout the count -- hanging on three votes at one point -- and experts said the outcome was still unclear.

About 8,000 votes in the northwest and another 5,000 in the south of the island nation of 300,000 still had to be counted.

Officials said they would have to recount 7,000 votes in the south, further complicating matters and delaying the result.

''We don't know anything for certain until the last vote is counted,'' University of Iceland political science professor Olafur Hardarson said on the national television network.

The election has been dominated by a single issue -- the tempo of big industry development in Iceland.

The long-ruling Independence-Progressive Party coalition wants aluminium giants like Alcoa to keep building smelters powered by Iceland's geothermal and hydroelectric resources, a trend that has driven rapid economic growth in recent years.

Main opposition parties the Left Greens and Social Democrats want development halted until the environmental and economic impact of the latest projects becomes clear.

OUTCOME With 89 percent of the ballot counted, the ruling coalition of Prime Minister Geir Haarde's Independence Party and the Progressive Party seemed on track to win 32 seats in the 63-seat parliament but the outcome depended on the uncounted votes.

Still, a poor showing by the Progressives meant that even if the government retained its majority, Haarde's Independence Party would likely need to seek a new partner to keep power.

The Progressives lost four of their 12 seats in what Hardarson called the worst performance in the 90-year history of Iceland's oldest party.

Independence, with 36 percent of the vote, was set to increase its number of seats to 24 from 22.

Haarde has said his natural second coalition choice is the Social Democrats, but its leader Ingibjorg Solrun Gisladottir vowed yesterday to throw her weight behind the opposition.

''My promise to talk to the opposition parties first still holds,'' she said during televised election coverage. ''Now there is an opening for exciting change.'' If the opposition does gain enough votes to form a government-toppling coalition, Gisladottir would probably become Iceland's first woman prime minister -- a job she has repeatedly said she covets.

The former Reykjavik mayor has pledged to introduce policies to allow the country's very poorest to share in the economic bounty of the past few years.

Voter turnout at 82 percent of the 221,000 eligible voters was down from 87 percent in 2003 elections.

The Left Greens made the biggest advance in the election, and looked set to rise from five seats to nine.

Political scientists have said the party's strong performance was an illustration of Icelanders' unhappiness with unfettered industry growth.

Public discontent has centred on worries about dam projects on Iceland's rivers to power the smelters and record-high borrowing costs in a fast-growing economy.

REUTERS>